Ice Bofa Asian Dollar High Yield Corporate China Issuer Index
Introduction
Ice Bofa Asian Dollar High Yield Corporate China Issuer Index is a market capitalization-weighted index that measures the performance of fixed-rate, high yield corporate bonds denominated in US dollars issued by Chinese companies. This index is designed to provide investors with a benchmark for the Chinese high yield corporate bond market.
History
The Ice Bofa Asian Dollar High Yield Corporate China Issuer Index was first launched on December 31, 2010, by the Bank of America Merrill Lynch in partnership with Intercontinental Exchange (ICE).
Composition
The index comprises of fixed-rate, high yield corporate bonds issued by Chinese companies in the US dollar denomination. The bonds must have a minimum outstanding amount of $100 million and a minimum remaining maturity of one year. The index also has a maximum of 50 constituents.
Methodology
The Ice Bofa Asian Dollar High Yield Corporate China Issuer Index is rebalanced monthly and is calculated using a market capitalization-weighted methodology. The index is also capped at 5% for any single issuer to ensure diversification.
Performance
The Ice Bofa Asian Dollar High Yield Corporate China Issuer Index has shown consistent growth over the years. As of December 31, 2020, the index had a total return of 9.90% for the year.
Investing in the Index
Investors can invest in the Ice Bofa Asian Dollar High Yield Corporate China Issuer Index through exchange-traded funds (ETFs) and mutual funds that track the index. These funds provide investors with exposure to the Chinese high yield corporate bond market and can be a good addition to a diversified investment portfolio.
Risks
Investing in high yield corporate bonds can be risky as they carry a higher default risk compared to investment-grade bonds. The Chinese economy is also subject to political and economic risks, which can affect the performance of the index.
Conclusion
The Ice Bofa Asian Dollar High Yield Corporate China Issuer Index provides investors with a benchmark for the Chinese high yield corporate bond market. Investors can gain exposure to this market through ETFs and mutual funds that track the index, but they should also be aware of the risks involved.